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LawTalk
LawTalk, Attorney
Category: Social Security
Satisfied Customers: 36393
Experience:  I have 30 years of legal and litigation experience, including representing clients before the U.S. Social Security Administration.
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I have paid the maximum 40 years. i receive or will receive

Customer Question

i have paid the maximum for over 40 years. i receive or will receive $2582.00 this calendar year. my similarly situated contemporaries receive more than this. how do i determine whether i am receiving all to which i am entitled?
Submitted: 1 year ago.
Category: Social Security
Expert:  LawTalk replied 1 year ago.

Good afternoon Stephen,

I'm Doug, and I'm sorry to hear of the confusion. My goal is to provide you with excellent service today. In order to give you a clear and concise answer, I will need some additional information about the circumstances, please.

1. Did you and your contemporaries each apply for social security at the same time (same year) and at exactly the same age (down to the month)?

2. How much more are they receiving?

Doug

Customer: replied 1 year ago.
at or about the same time at or about the same age. but the question is how do you determine the amount to which i am entitled.
Expert:  LawTalk replied 1 year ago.

Good morning,

Well, retiring at about the same time and at about the same age will only work out to your respective benefits being about similar. I can explain how your retirement benefit is calculated, but it may be a bit difficult to follow as it involves a pretty complex mathematical calculation.

The one thing that I would point out is that for a person retiring in 2016, and who paid in the maximum over their lifetime for at least 35 years would receive a benefit of $2,787.80. (It was $2663 in 2015 and $2642 in 2014 and $2533 in 2013) For every month that a person waits to collect their benefit past full retirement age, their benefit grows by 2/3 of a percent (8% per year). So in 2016 if there was just a 6 month difference in retirement dates between PERFECTLY matched people (income, age)----there would still be a monthly income difference of about $111.00---for only 6 months difference in retirement date.

How a person's benefit is determined is really quite complicated, and the math involved is tedious and can be difficult to follow for some, and contrary to what might be expected, the benefit is not evenly awarded based on your lifetime income, but instead is heavily weighted on the first $322,140 that you earn in your life. However, I will be happy to try and explain it to you.

Your benefit is based on the income that you earned over the highest 35 years of your working life. If you didn’t work 35 years, then some years will be considered as zeros in the equation. First social security takes all income that you earned in a lifetime and for which you paid social security taxes. They then apply a multiplication factor to it according to what year you earned it in, to make up for the fact that earning $5,000 in 1960 was worth more than $5,000 today---so they multiply the 1960 income by a given number. In other words, earning $10,000in 1960 is the equivalent of earning $107,300 in 2013. They then add all of those numbers (years of income after the multiplication has been done) up and divide it, first by 35(years), and again by 12 (months), to get an average monthly income. Here is a table that you can actually use to determine the adjusted average monthly income that social security will use to determine your benefit amount: http://www.socialsecurity.gov/pubs/EN-05-10070.pdf

Once your average monthly income over the 35 year period is determined, then the benefit you will be paid is determined by adding 90% of the first $767.00,32% of the remainder up to $4,624.00 a month, and then finally, 15% of all amounts over $4,624.00.

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Once all of your adjusted monthly income (top 35 years at most) is determined and then added up, social security will divide that amount by 35 (years), and then again by 12 (months), to get an average monthly income for you. It is from that average monthly income that your benefit is determined.

Based on your average monthly income, social security will pay as your retirement benefit at full retirement age 90% of the first $767,32% of the remainder up to $4,624 a month. Then finally, if your monthly income average is greater than $4,624, they will add 15% of all amounts over that.

As can be seen, while social security will pay 90% of the first $767 of your average monthly income as a benefit to you, that percentage of payment drops drastically to only 32% after the first $767 of average monthly income.

Please keep in mind that, even though you have already paid your deposit money over to JustAnswer, until you rate me highly for my service, I will not be paid for having assisted you with your questions.

You may of course reply back to me and I will be happy to continue to assist you further.

I wish you well,

Doug

Expert:  LawTalk replied 1 year ago.

Good afternoon,

Do you have any additional questions that you would like me to address for you? If I have provided you with the information you were seeking, would you please now rate my service to you?

Please keep in mind that, even though you have already paid your deposit money over to JustAnswer, until you rate me highly for my service, I will not be paid for having assisted you with your questions.

Thanks in advance,

Doug